One machine has to be purchased to produce a certain product. Two options are available. Machine A, which is capable to produce 50 units per hour, can be purchased for $900,000. On the other hand, Machine B, which is capable to produce 55 units per hour, can be purchased for $1,000,000. The variable costs per hour on machines A and B are $40 and $45, respectively. The available working hours per year are 2000 and each unit produced is sold for $50. What is the profit that can be achieved in the first year of production? Assume that all units produced are sold and only one machine is used.
One machine has to be purchased to produce a certain product. Two options are available. Machine A, which is capable to produce 50 units per hour, can be purchased for $900,000. On the other hand, Machine B, which is capable to produce 55 units per hour, can be purchased for $1,000,000. The variable costs per hour on machines A and B are $40 and $45, respectively. The available working hours per year are 2000 and each unit produced is sold for $50. What is the profit that can be achieved in the first year of production? Assume that all units produced are sold and only one machine is used.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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One machine has to be purchased to produce a certain product. Two options are available. Machine A, which is capable to produce 50 units per hour, can be purchased for $900,000. On the other hand, Machine B, which is capable to produce 55 units per hour, can be purchased for $1,000,000. The variable costs per hour on machines A and B are $40 and $45, respectively. The available working hours per year are 2000 and each unit produced is sold for $50. What is the profit that can be achieved in the first year of production? Assume that all units produced are sold and only one machine is used.
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